The Carbon Reduction Commitment (CRC) is an unusual document to put up in the public space and ask for response. It does not affect people directly, or even small business. In fact, only relatively large organisations will be directly affected by it. In this way it doesn’t really lend itself to activism, or invite controversy. So why is the Draft Order to Implement the Carbon Reduction Commitment on Write to Reply? The CRC is an important and innovative way of getting business to address their contribution to climate change, but no other programme like it exists. Therefore, it is important to understand what it is, how it will work, and how businesses will cope. Most of all, it is crucial that the potential issues and problems with the CRC are understood and acted upon, so that the exercise is successful in fulfilling its aims.

What is the Carbon Reduction Commitment? The CRC will be a capped emissions trading market. The CRC is not a tax, and for most businesses it will have little cost and potentially some revenue generation. Only the poorest performing companies will be penalised – as they are already in the extra, surplus energy cost they incur by not investing in energy efficiencies. The CRC will require extra resources for companies to administer the extra reporting requirements, as they would have if the extra emissions reporting elements had not been dropped from the Climate Change Act (2008). A case can be made that these reporting elements were dropped because of the CRC.

A mandatory carbon emissions trading scheme of this scale has yet to be adopted anywhere in the world. However, there are similar schemes in development in Australia and North America – including proposals in the US. The EU’s Emissions Trading Scheme (EU-ETS) is similar, and the credit markets will be linked, but does not have same scope. The EU-ETS only covers large-scale combustion (like large coal power plants or refineries) where the CRC covers electricity consumption as well as combustion (except transportation).

It is creating a market out of “thin air”, but that isn’t to say that emissions markets are not proven. For example, the US Acid Rain Program of the early 1990s successfully reduced Sulphur Dioxide through the use of emissions trading. However, once again the scale is not as purvasive as the CRC intends to be.

The challange is clear, it is a large and innovative programme. It has complexity, and therefore there is the potential for implementation to be confused and poorly communicated. Unfortunately, this appears to be the case so far.

For example: qualification for inclusion is based on who pays the electricity bill. Initially this seems like a simple and practical approach, but it does not understand all the complexities between landlord and tenant and managing agent that are possible in the UK. Many issues that will arise out of the rental arrangements of large buildings could have been mitigated with better communication between the government and potential participants, but to date plans and timelines have been confusing and difficult to understand.

This is the reason to post the draft implimentation document on Write to Reply. It is important be able to discuss the draft, section by section. More people need to think about how the CRC will impact their business. More questions need to be asked, by a larger range of people. The CRC can be a successful programme, but only if it is properly developed and understood. If the original documents are held up to as many people as possible, and the question asked: